What Is The Global Significance Of Mediatek'S Share Layout After Abandoning Ethiopia To Invest In Indonesia?

In the past two years, the increasingly complex domestic and international market environment has enabled domestic textile enterprises to actively carry out the global industrial layout. It is a big performance that many leading enterprises went to Vietnam to invest and build factories Jiangsu Lianfa Textile Co., Ltd (hereinafter referred to as "MediaTek") is no exception. Recently, MediaTek announced that it will invest 1.3 billion yuan in the construction of high-end woven clothing fabric projects in Indonesia. Subsequently, MediaTek also announced the termination of the cooperation intent agreement with Ethiopia. So, Why did MediaTek give up Ethiopia to invest in Indonesia? Will Indonesia become the next hot investment country for domestic textile enterprises?

Don't fight uncertain battles

Objective assessment of investment risk

With the rising cost of domestic labor, MediaTek actively adapts to industrial transfer trend , gradually transferring production capacity to low-cost Southeast Asian countries, and MediaTek has successively invested (acquired) MediaTek Clothing (Cambodia) Company, AMM Clothing (Cambodia) Company, Lianfa Hengyu (Cambodia) Clothing Company And plans to transfer the clothing production capacity of MediaTek to MediaTek Hengyu. MediaTek has said that Ethiopia will be the key area for MediaTek to consider capacity layout in the future.

As early as On November 29, 2016, MediaTek and China Civil Engineering Group Co., Ltd., together with the Ethiopian government represented by the Ethiopian Investment Commission, signed the Memorandum of Understanding on the development of textile and clothing industry in Deredawa, Ethiopia. According to the plan, the textile and clothing industry chain project of MediaTek in the Deredawa Industrial Park in the country covers an area of 90 hectares, of which the dyed fabric factory is expected to have a monthly production capacity of 2.5 million meters, and the dyed fabric factory is expected to have a monthly production capacity of 2.5 million meters, Clothing factory The total monthly production capacity is expected to be 3 million pieces, and the spinning mill is expected to have a scale of 200000 spindles. At that time, MediaTek disclosed that the agreement only provisionally determined the initial investment scale, and the specific project scale and investment schedule were determined by the company after investigation and demonstration and negotiation among the three parties, after which the company will invest in stages and implement step by step as required.

The main reason for the termination of the above cooperation intent agreement by MediaTek is The company believes that the current project of developing textile and clothing industry in Dresdawa may have a long payback period and a low rate of return on investment, which does not meet the company's requirements for foreign investment and risk control. MediaTek said that it would consider the investment in Ethiopia when the future conditions are ripe.

In this regard, industry experts believe that, The risks and opportunities of overseas investment coexist, and the timing and environment are different. The multiple due diligence and on-site evaluation of project site selection of MediaTek have enabled it to correctly understand the benefits and risks of the project and make decisions. Leading enterprises should have such a rational awareness.

Expand the Indonesian fabric market

Enhance the competitive advantage of enterprises

The termination of cooperation with Ethiopia made MediaTek's investment of 1.306 billion yuan in Indonesia more decisive. The announcement issued by MediaTek shows that, In order to make full use of the advantages of resources, labor force and customers in Indonesia, expand the market of high-end woven fabric in local and international markets, and enhance the company's competitive advantage in the field of high-end woven fabric manufacturing, MediaTek intends to cooperate with Indonesia PTUngaranSariGarments (hereinafter referred to as "PTU") Cooperate to invest in the construction of a project with an annual output of 66 million meters of high-grade woven clothing fabrics in Indonesia. The project will be implemented in two phases. The first phase will produce 36 million meters of beige fabric annually, and the second phase will produce 30 million meters of printed and dyed fabric annually.

For project address, MediaTek and PT Indonesia KawasanIndustriKendal (Kendall Industrial Park Co., Ltd., hereinafter referred to as "KIK") A Memorandum of Understanding has been signed on the purchase of land for investment in the textile and clothing industry in Kendal Industrial Park, Indonesia. The two parties reached an agreement on the company's purchase of land in Kendall Industrial Park for investment in the textile and clothing industry, as well as KIK's provision of various infrastructure services for the company, striving for preferential policies for the company, assisting the company in handling various procedures, ensuring that all conditions required for the company's production and operation are met, and exclusive planning in the park.

It is understood that, The Indonesian local enterprise PTU that MediaTek cooperated with this time has been in operation for more than 40 years. At present, the company is one of the largest garment manufacturers in Indonesia, and is world-famous brand Supply men's and women's shirts, skirts, etc. The company has 9 production bases, 30 factories and 2 washing plants, with an annual output of 50 million pieces of ready to wear garments.

MediaTek is expected to, Under the condition that the above projects are fully up to capacity, the annual income can reach 120 million dollars, the investment payback period is 8.2 years, and the total investment return rate is 11.6%.

MediaTek said that the global textile industry and trade pattern are undergoing obvious changes, and it is of great strategic significance to accelerate the global layout of the company. The garment industry in Indonesia is clustered, and the demand for high-grade woven fabrics is strong, with large market potential and space. As a large garment enterprise in Indonesia, PTU's cooperation with PTU is conducive to accelerating the project and better expanding the local market.

Carry out global market layout

Improve risk resistance

This investment in Indonesia by MediaTek cannot help but make enterprises in the industry interested in Indonesia. Especially in the current complex and changing international trade environment, what are the advantages of "going out" to Indonesia?

Indonesia's textile industry has a long history, complete industrial chain and high industrial concentration. According to the Indonesian National Bureau of Statistics, There are 9.4 million spindles in Indonesia, and there are 5 spinning enterprises with a scale of one million spindles, mostly using spinning equipment made in China. There are about 46000 textile and clothing enterprises, with an annual output value of about IDR 120 trillion (about 100 billion yuan) and an annual industrial added value of IDR 40 trillion. Indonesian textile enterprises are concentrated in West Java, Central Java and around Jakarta, accounting for 88%. Their high-end yarns and garments are competitive in the international market. Among them, sritex textile group, located in thoreau, central java province, is the largest comprehensive textile enterprise in southeast asia. currently, it has a spinning capacity of 1.2 million spindles, a viscose production line with an annual output of 100000 tons, and a clothing production line with an annual output of 16 million pieces. it exports about 30000 tons of yarn to china every year.

In terms of production costs, the average monthly salary of employees of Indonesian textile enterprises is about 120 US dollars, and the stability of employees is high. The electricity price is equivalent to 0.6 yuan/kilowatt hour. There is no quota limit on the import of cotton and other textile raw materials, and the comprehensive production cost is lower than that in China.

The Kendall Industrial Park that MediaTek chose to invest in this time is located in an important port trade city in Indonesia, with sea, land and air transportation extending in all directions. The industrial park covers an area of 2200 hectares. The person in charge of the industrial park said that up to now, 41 enterprises have settled in the industrial park, with a total investment value of 475 million dollars, covering fashion (Textile and clothing), food processing, furniture, architecture Material Science And logistics, etc. In addition, from 2019, the Central Java Provincial Government will also build a new seaport near Kendall Industrial Park to replace the old one, which is expected to be completed by 2020. The completion of this seaport will further improve the supporting facilities of the industrial park and increase the convenience of freight transportation for enterprises settled in the park.

The relevant person in charge of MediaTek said that, Indonesia has a strong demand for high-end clothing fabrics. The local garment enterprises have high recognition of the company's products, which has an urgent need to improve the fabric quality and shorten the delivery time. The investment and construction of the project will make up for the gaps in the local textile industry chain, consolidate the core competitiveness of the company's products, shorten the delivery time, and meet the needs of the company's strategic customers.

Industry experts believe that, The cost advantage of China's textile and clothing industry in export has gradually lost, and the major textile and clothing importing countries, such as the United States and Japan, have reduced their orders in China. In addition, considering factors such as reducing trade frictions and avoiding tariffs, Chinese textile and clothing enterprises finally began to move their factories to Southeast Asian countries with more advantageous labor costs, which has gradually become a trend. For MediaTek, the investment and construction of the project will be conducive to extending the core competitiveness of the company in the field of high-end woven fabrics, realizing the global production base layout of the enterprise, and making full use of tariff advantages and labor resource advantages to improve the global competitiveness of the enterprise. In order to optimize the global strategic layout and let the rapid growth of production capacity drive the continuous improvement of performance, foreign investment must seize opportunities and avoid risks.